There is more competition coming the way of Korean multinationals in the consumer electronics and durables segment.
If the local players had forced the Korean majors to fight on the value platform in the lower end of the consumer electronics segment, there is a strong fight coming up in the white goods sector as well. Two local players - Maharaja Appliances (a small appliances major) and Beltek (which has a presence in the CTV and audio segment) - have not only struck a financial tie-up but are also planning to benefit from each other's strength to expand and diversify their portfolios.
Maharaja Appliances has recently picked up a 50 per cent stake in Beltek for an undisclosed amount. According to Mr R.S. Kandhari, CEO, Beltek India, following the stake sale, Beltek is planning to diversify into segments such as microwave ovens, air-conditioners, refrigerators and washing machines. "This would make us the first regional player to have a complete range. Having a comprehensive product portfolio helps guard against the seasonality aspect and ensures sales all year round," he said. Beltek would be sourcing these products from Maharaja's plant in Badi, Himachal Pradesh and selling them under its own brand.
Maharaja Appliances, in addition to rolling out the products mentioned above, would source audio and DVD products from Beltek to sell under its own brands (which consists of Maharaja, Whiteline and Solec).
In other words, both the companies would also operate as original equipment suppliers to each other.
Meanwhile, Beltek's focus would remain on the semi-urban/rural markets, and the new products in its portfolio will be priced very competitively. While a 1.5 tonne window air-conditioner will be priced at Rs 10,990, a 170-litre refrigerator from Beltek will be priced at Rs 5,990.
The company hopes its new roll-outs will help increase its turnover to Rs 250 crore in 2005-06, from Rs 97 crore in 2003-04. "White goods should account for about 60 per cent of our sales subsequently. There has been a lot of price erosion in the consumer electronics segment - about 12-15 per cent last year, and another 6-7 per cent this year," Mr Kandhari said.
Meanwhile, Maharaja and Beltek will cooperate on the distribution front as well for their products in order to increase reach and penetration.